Fast-food chains in the United States and across the world have struggled. Customers have increasingly pushed back against what they perceive as high prices.
The problem is that in many cases, the various fast-food giants are just passing on their increased costs. Labor costs have gone up all across the United States, while the price of every item that makes up your fast food meal has likely increased as well.
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It’s a double-edged sword where consumer feel they are being taken advantage of, while the businesses are simply trying to maintain their profit margins.
People expect their fast-food burger meal to be cheap. They want value meal options and price points for complete meals that are at least under $7, but in many cases under $6 or even $5.
Chains like Burger King and Popeye’s, which are both owned by Restaurant Brands international (QSR) , also don’t really have the luxury of playing with portion size. People know what a Whopper looks like, and the same goes for Popeye's chicken.
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That puts the company in the challenging position where it has to both maintain its profit margin and not raise prices. It’s a situation that may very well be impossible.
RBI CEO Josh Kobza talked about the problems facing not just his company, but also his rivals.
Image source: Jakub Porzycki/NurPhoto via Getty Images
Burger King, Popeye's face global headwinds
Kobza had to walk a narrow line during his company's first-quarter earnings call. He had to be upbeat, while also explaining away mediocre results and preparing Wall Street for potentially more mediocrity to come.
“Through the first few months of 2025, we've been navigating a highly dynamic macro backdrop, one that's evolving differently across each of our key markets. As a global franchisor, offering convenience and everyday value for guests, we're certainly better positioned than many others to navigate this evolving environment, but we're not immune, and our Q1 results reflect that,” he shared.
Overall, RBI, which also includes Tim Horton's, held its own in a challenging climate.
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“First quarter consolidated comparable sales were 0.1% or just over 1%, excluding the impact from Leap Day, and net restaurant growth was 3.3%. This translated into system-wide sales growth of 2.8% and organic adjusted operating income growth of 2.6%. We anticipated that Q1 would be our softest quarter of the year and believe that some of the macro noise may have driven further softness,” he added.
Those numbers aren't bad, but they're below where Kobza wants them to be.
RBI has confidence in future growth
When everyone else doesn't perform very well, it makes your slight gains look better. It's sort of like not having tall friends if you are on the short side.
“We continue to perform reasonably well compared to many of our global peers, reflecting the underlying strength of our brands and the quality of the plans we are executing to improve on the fundamentals that our guests care about most. We know relative performance alone isn't enough and doesn't pay the bills for us or our franchisees, though, which is why we're focused on delivering improved absolute results through the balance of the year,” the CEO said.
Kobza noted the pricing pressure his various brands have been facing.
“In any environment, our guests are focused on quality, service, and convenience at a fair price. And our teams are focused on exactly that, improving the value proposition for our guests at each of our brands and making that experience better each time they come in,” he added.
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That's a challenge, given what consumers want — maybe not more for less, but at least the same for the same. He highlighted that various RBI brands have been delivering on that challenging problem.
“Whether that is newly remodeled restaurants of Burger King and Popeye's or improved service standards at Tim Hortons in the p.m. daypart, we're spending our time on what matters most,” he said.
